Commercial contracts


A commercial contract is a contract between two parties which mostly relates to a commercial issue. There is no requirement for the contract to be written. Unlike non-commercial contracts a commercial contract is viewed by the courts to be legally binding (unless otherwise indicated in the contract itself).

What are commercial contracts?

Commercial contract law covers a wide range of topics. They can be drawn up between businesses or businesses and their customers. The law provides the framework for contracts to be drawn up and enforced to ensure they are legally binding agreements, and breaking a contract can be a serious offence.

Commercial contracts could be, for example, an agreement between two or more businesses to work together on a new project.

Commercial contract law gives them the tools they need to formalise their agreement in a contract. In the business-to-consumer relationship, contract law is used to create terms and conditions that the business and consumer will be legally bound by.

If you are a consumer who has bought faulty goods, or has another complaint to make about a retailer, you can use commercial contract law (as it relates to consumer rights) to get a refund, or use the courts for other forms of redress. As the law can be complex - especially over international boundaries - never attempt to bring a lawsuit yourself. Always contact a qualified business solicitor to advise, help and support you throughout your case.

When do you need a commercial contract?

For policy reasons, a commercial contract may arise between two commercial parties or between a commercial party and an individual, but it is unlikely to arise between two private individuals. The rationale for this policy can be illustrated with the following examples:

  • A restaurant and a wine supplier should be able to seek court intervention when a dispute between them arises
  • The same could be said for a car dealer and private customer
  • However, non-commercial agreements such as one between parents and their child regarding allowance should not be a matter for the courts

You have probably been party to hundreds of commercial contracts, from taking public transport to buying a mobile phone. If you have experienced complications regarding any of these and are considering legal action, there are a few things you should consider:

  • The limitation period for breach of contract is 6 years from when the breach occurred
  • If the agreement was not well written (or not written at all), the court may find it difficult to establish the exact intention of both parties. It is the intention on which the courts base their interpretation of the contract

As businesses now trade more frequently over international boundaries thanks to the internet, commercial contract law can also help businesses and consumers alike to protect their commercial interests, and also ensure they are protected by consumer law no matter which country they are based in.

International commercial contract law can be highly complex, so it is always advisable to use qualified solicitors to draw up your commercial contracts.

For more information on the benefits of using a legal representative, see our page on using a commercial lawyer.

Have you entered into a commercial contract and you are now in dispute with the company? Do you require assistance in the early drafting stages of a commercial contract for your business? Contact Law can recommend an expert company and commercial law solicitor who can assist you with any issues relating to commercial contracts. Please call us on 0800 1777 162 or complete the web-form above.

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